These 11 companies with strong dividend yields and stable cash flows promise attractive distributions – and the potential to further increase them in the future.
• 11 dividend shares at a glance
• Dividend yields of 4 to 5.5 percent
• Shares with scope for potential increases
In an environment of volatile markets and uncertain economic outlook, many investors are looking for stable sources of income. Dividend shares are considered a proven strategy in order to achieve regular distributions as possible and at the same time benefit from capital growth. But which companies actually have the potential to further increase their dividends in the future?
A current analysis of Marketwatch based on the expected free cash flow (FCF) of the next twelve months identifies 11 companies with dividend yields of up to 5.5 percent that have sufficient scope for potential future increases. A high FCF return is often an indication that a company generates solid cash flows that can be used either to pay dividends, return purchases of shares, debt reduction or further investments.
A well -founded selection process: stocks with high distributions
The examination began with the components of the S&P 1500 Composite Index, which is made up of the S&P 500, the S&P Midcap 400 Index and the S&P Small Cap 600 Index. In the next step, shares were filtered out that have a dividend yield of at least 4 percent.
To refine the selection, Marketwatch has only taken into account companies that are covered by at least five analysts. This ensures that well -founded estimates are available for the analysis. Another criterion was that the estimated FCF return must be at least twice as high as the current dividend yield. This indicates that a company can not only maintain its distributions, but also increase.
Analysis shows that these 11 dividend shares pass the test
The market watch analysis shows that only 11 companies meet these strict criteria. However, such a screening is only a snapshot. Before you invest, you should always do your own research and ask yourself whether the company remains competitive in the long term.
Kohl’s Corp. leads the list with a dividend yield of 5.46 percent and an estimated FCF return of impressive 36.94 percent, which indicates a significant buffer of 31.48 percent.
Macy’s Inc. follows with a dividend yield of 5.37 percent and an estimated FCF return of 18.98 percent, which offers a buffer of 13.60 percent.
Viatris Inc. shows similar values with a dividend yield of 5.36 percent and an estimated FCF return of 19.43 percent, which results in an expected scope of 14.07 percent.
APA Corp. has a dividend yield of 4.79 percent, while the estimated FCF return is 16.25 percent, which results in a buffer of 11.47 percent.
Lincoln National Corp. Something falls out of line, since the return on the basis of the profit per share (EPS) is calculated. The dividend yield is 4.78 percent, while the estimated FCF return is 20.90 percent, which means a buffer of 16.13 percent.
Travel + Leisure Co. comes to a dividend yield of 4.62 percent and an estimated FCF return of 16.68 percent, which results in scope of 12.06 percent.
Cable One Inc. has a dividend yield of 4.46 percent and an estimated FCF return of 17.73 percent, which leads to a buffer of 13.26 percent.
Crescent Energy Co. shines with a dividend yield of 4.15 percent and a very high estimated FCF return of 24.48 percent, which offers a scope of 20.33 percent.
Nexstar Media Group Inc. has a dividend yield of 4.11 percent and an estimated FCF return of 17.23 percent, which leads to a buffer of 13.12 percent.
American Eagle Outfitters Inc. offers a dividend yield of 4.08 percent, while the estimated FCF return is 12.91 percent, which results in a buffer of 8.83 percent.
Xenia Hotels & Resorts Inc. closes the list with a dividend yield of 4.03 percent, an estimated FCF return of 12.71 percent and a scope of 8.68 percent. Here the return based on the Adjusted Fund from From Operation Sales (Affo) was calculated.
Investors who rely on dividend shares should not only look at high distributions, but also on their sustainability. Companies whose free cash flow is well above the dividend yield often still have scope for future increases. Before investing, however, it is advisable to get a comprehensive picture of the company.
Editor finance.net
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